Cheap Reliance gas wonآ’t deter LNG suppliers

Vol 8, PW 6 (16 Jun 04) Midstream & Downstream

Reliance might have won NTPCs tender for Gandhar and Kawas with its competitive domestic natural gas price but this hasnt stopped LNG suppliers showing interest in Kayamkulam.

NTPC received two gas supply offers at Kawas and Gandhar: one for natural gas from Reliance, the other for LNG from Petronas. Reliances domestic gas price easily beat the LNG price quoted by Petronas.

Will this be repeated at Kayamkulam Possibly, but LNG suppliers feel they still have a chance. The question is how much gas Reliance has and how long it will last, says one LNG supplier.

At Kawas and Gandhar, Reliance is committed to supplying NTPC about 3m t/y natural gas. Reliance will need another 3.5m t/y natural gas for its proposed Dadri power station if it wins the tender, adding up to about 22m cm/d.

Demand for gas, however, will continue to surge. By 2011 domestic gas demand is forecast to be 240m cm/d or about 60m t/y, reveals a source.

Reliances natural gas will not be enough to meet this demand. The market will still need more gas.

LNG has a future in India. LNG suppliers believe Reliances 13-tcf gas find at KG-DWN-98/3 is, the short term and not long term answer to domestic gas demand.

Meanwhile, NTPC seems to be putting to good use at Kayamkulam some of the lessons learnt during the two-year-old Kawas and Gandhar gas tender. We understand for example that the Kayamkulam tender differs from the Kawas and Gandhar process in significant ways.

NTPC has improved after the Kawas and Gandhar experience, says one bidder. For Kawas and Gandhar bidders were asked to quote gas supply and services separately.

But at Kayamkulam NTPC is giving bidders the choice to submit two bids: One which has gas supply and services separate and the other a composite offer including both supply and services.

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